Legal Ethics Opinion #1590
Conflict of Interest--Multiple Representation--Misconduct:
Attorney and Spouse/Attorney Serving As Co-Executors With
Decedent's Heirs, After Having Represented One Heir
You have presented the following hypothetical facts. Several
years prior to her death, Decedent had her family attorney
("Attorney") prepare her will, dividing her estate into two
trusts. At the time of her death, Decedent's property consisted
primarily of stock in a family corporation which owned only real
property and partnership shares in a partnership which also owned
only real property. You indicate that the value of the real
property in the corporation and in the partnership is quite
substantial, is primarily non-income producing, and has been in
Decedent's family for many years.
You advise that, under the terms of the will, there are two
trusts, one for Decedent's daughter with income to the daughter
for life and the remainder at her death to daughter's children,
and the other for Decedent's son with income to the son for life
and the remainder at his death to his sister's children. Son is
unmarried and approximately sixty years old. Each of the
respective trusts are to be funded by one half of the partnership
and stock interests of Decedent's estate, and each of the trusts
has the same trustee, i.e., the son, the daughter, one of the
daughter's children, and the attorney who drafted the will,
together with attorney's wife (who is also an attorney in his
firm).
You further advise that, after Decedent's death, Daughter
immediately approached Attorney and requested that he represent
the estate; Son, because he believed that Attorney had the
interests of the sister at heart, objected to Attorney acting on
behalf of the estate. Daughter, at the suggestion of Attorney,
sought outside counsel ("Outside Counsel") who, with the help of
Attorney, commenced a suit against son to have him removed as
executor, alleging failure of Son to cooperate in the
administration. Son filed his answer, denying failure to
cooperate, alleging that he had been excluded from participation
in decisions related to the estate, and further alleging a
conflict of interest on the part of Attorney.
When the suit was settled by agreement prior to trial, the
litigation was terminated with prejudice. Among the terms of the
written settlement agreement were that Outside Counsel
representing Daughter would take over the representation of the
estate and that Attorney would assume representation of Daughter.
Also, it was agreed that "The parties waive any conflicts ---
attorney or outside counsel--- have as a result of prior
representation".
Following the termination of the litigation, Outside Counsel took
over representation of the estate and many meetings were held
with Outside Counsel and all the executors present. At every
meeting, Daughter was accompanied by, and represented by,
Attorney. At most of the meetings, the primary conflict between
Daughter and Son was related to Daughter's desire to retain, rather than dispose of,
the property of which Decedent died seised and possessed, and
Son's desire to maximize income, which would require disposition
of much of the property. At some meetings, Outside Counsel
suggested a solution of funding Son's trust with some stock or
partnership interests and retaining in Daughter's trust the
majority of the interest in one parcel of which Daughter was
particularly fond. Attorney objected to this compromise and has
also made statements that the testator would not have wanted the
disposition of the property, if possible, and that it was the
purpose of the executors and trustees to carry out her intent.
You indicate that the estate's final accounting, qualification of
trustees, and funding of trusts are now imminent.
Finally, you indicate that Son has strongly objected to Attorney
and Attorney's wife qualifying and subsequently acting as
trustees since Son believes that Attorney and his wife are biased
by reason of their representation of Daughter, whose interest in
preserving non-income producing property is adverse to Son's
interest in maximizing income for the life of his trust.
You have asked the committee to opine whether, under the facts of
the inquiry, it would be proper for Attorney and Attorney's wife
to qualify and act as trustees of Decedent's trusts, after having
represented Daughter in disputes, yet unresolved, as to the
disposition of the estate.
The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 5-105(A), which states that a lawyer shall
decline proffered employment if the exercise of his independent
professional judgment in behalf of a client will be or is likely
to be adversely affected by the acceptance of the proffered
employment, except to the extent permitted under DR 5-105(C); and
DR l-l02(A)(4) which prohibits a lawyer from engaging in conduct
involving dishonesty, fraud, deceit, or misrepresentation which
reflects adversely on a lawyer's fitness to practice law.
The committee has previously opined that DR l-l02(A)(4) applies
to an attorney's conduct when acting in a fiduciary capacity.
See LEO #1325
The committee is of the opinion that there is an actual conflict
between Daughter and Son since Daughter's interest is in
preserving the non-income producing property while Son's interest
is in maximizing income for the life of his trust. The committee
recognizes also that the attorney, as trustee, has a fiduciary
duty towards both beneficiaries, Daughter and Son. See LEO
#1494.
In light of Attorney's ongoing representation of Daughter in
disputes with Son which are as yet unresolved, the committee
believes it is improper for Attorney and Attorney's wife to
qualify and act as trustees under DR 5-l05(A).
Committee Opinion
April 11, 1994